Travel Agent's Booking Function Is Not Substantial Business Activity And Not Taxable: Delhi High Court

The Delhi High Court has held that the travel agents in India were merely connected to the extent that they could perform a booking function but were not capable of processing the data of all the airlines together in one place.

The division bench of Justice Manmohan and Justice Manmeet Pritam Singh Arora has held that a booking function is not covered under substantial business activity and, therefore, not taxable.

The ITAT and CIT(A) has held that, out of several activities, the activities of Calleo Distribution Technologies Private Limited in India were only in respect of generating requests and receiving end results of the process. In other words, the computers at the desk of the travel agent in India were merely connected to the extent that they could perform a booking function but were not capable of processing the data of all the airlines together at once. The ITAT also held that the assessee has not deployed any assets in India.

The appellant/department has challenged the order passed by the ITAT.

The department stated that the ITAT has erred in holding that only 15% of the revenue is attributable to the assessee's PE in India without appreciating the facts of the case.

The appellant contended that the ITAT had failed to note that the substantial activities relating to the business of the assessee were carried out in India and, accordingly, the entire booking fees/revenue generated from India would be taxable in India.

The court dismissed the appeal of the department.

Case Title: CIT Versus Travelport L.P. USA

Citation: 2022 LiveLaw (Del) 946

Date: 02.09.2022

Counsel For Appellant: Senior Standing Counsel Ruchir Bhatia

Counsel For Respondent: None

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